Market forces rained on the parade of TomTom N.V. (AMS:TOM2) shareholders today, when the analysts downgraded their forecasts for next year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

Following the latest downgrade, the two analysts covering TomTom provided consensus estimates of €555m revenue in 2025, which would reflect a measurable 3.4% decline on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 36% to €0.09. Previously, the analysts had been modelling revenues of €621m and earnings per share (EPS) of €0.19 in 2025. There looks to have been a major change in sentiment regarding TomTom's prospects, with a measurable cut to revenues and the analysts now forecasting a loss instead of a profit.

Check out our latest analysis for TomTom

The consensus price target fell 25% to €6.00, implicitly signalling that lower earnings per share are a leading indicator for TomTom's valuation.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. One more thing stood out to us about these estimates, and it's the idea that TomTom's decline is expected to accelerate, with revenues forecast to fall at an annualised rate of 2.7% to the end of 2025. This tops off a historical decline of 0.9% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 10% per year. So while a broad number of companies are forecast to grow, unfortunately TomTom is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The most important thing to take away is that analysts are expecting TomTom to become unprofitable next year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that TomTom's revenues are expected to grow slower than the wider market. With a serious cut to next year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of TomTom.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2027, which can be seen for free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies backed by insiders.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.